Bleak Housing Market No Deterrent for Toronto Homebuyers
In mid-December, a Toronto area home sold for $400,000 over asking, an event that in many ways signaled a new escalation of in the city’s real estate market. Indeed, 2016 proved to be another record setting year for the Toronto real estate sector, with more homes being sold for hundreds of thousands of dollars over asking.
This was also compounded by a shortage of new home inventory, making the pool of available houses much shallower and much more competitive. However, despite the amount of new homes hitting an all-time low in December, home buyers in Toronto remain curiously optimistic about their ability to find the house of their dreams.
But, what exactly is considered a dream house in the Toronto area?
A single detached home has become the gold standard for homeownership. This is interesting considering that Toronto has a well-known moniker, ‘Condo City’, that describes the sheer amount of high rises that have reshaped the Toronto skyline over the years. Although there has been a steady stream of condo builds in the last decade, there is a sector-wide housing shortage that is expected to drive prices for the few that are available sky-high over the next year.
“The low inventory story is not only about low-rise – high-rise inventories have been on a downward path over the past three years,” said Patricia Arsenault, executive vice-president of Altus Data Solutions, a research firm. “Total available inventory in November was the lowest November level we have seen since we first started to track this data in 2000.”
The lack of new homes has driven the price of an average home in the GTA to $1,230,961, a 27 percent increase from the same time last year.
Even though there is housing shortage and the homes that are available are now receiving offers of almost a half a million over asking, Toronto homebuyers are resiliently optimistic, a trait that doesn’t surprise long-time real estate expert Larry Weltman.
“Torontonians are a hopeful bunch. Whether it’s our hockey team or our housing prospects, we tend to always see the silver lining,” pointed out Weltman.
For Larry Weltman, who has worked as a commission advance specialist at Access Easy Funds, a company that provides realtor commission advances, the market saturation comes as little surprise. “We knew there was a shortage coming for some time. The pace of migration and population growth has dwarfed the housing construction sector,” added Larry Weltman. “Add to that the lack of space to actually build single detached homes and you can see why demand has shot through the roof.”
While homebuyers may be looking at the future with rose coloured glasses, analysts believe that 2017 will be another year of high demand, as 905ers scramble to find something within the Toronto city limits to circumvent Mayor Tory’s proposed road tolls. The $2 toll, which will affect commuters who use the Don Valley Parkway and Gardiner Expressway, the city’s two busiest thoroughfares, is being touted as a much needed revenue stream for infrastructure and transit repairs.
There is, however, good news for prospective home buyers. In a recent Ipsos poll conducted for the Ontario Real Estate Association, 19 percent of homeowners said they plan to sell their home in the next two years, which will add much needed stock to the available housing market.
Author: Anthony J. Dean